Housing Construction Gains Not Translating to Much Hiring

The housing sector continues to be unable to translate strong growth into larger job gains.

Associated Press

Construction employment advanced by 20,000 in September, the Labor Department said Tuesday. A noteworthy gain after six months of holding essentially flat, but about three-quarters of the improvement was tied to nonresidential construction.

Jobs connected directly to home building advanced by 5,400 last month, a gain that’s slightly below the average monthly improvement recorded since March.

From a year earlier, employment in home building was up 4.8% in September. That surprisingly weak considering spending on residential construction had advanced better than 18% from August 2012 to August 2013, according to Commerce Department data released Tuesday.

“Home building firms and subcontractors have chosen not to hire additional workers, but simply use the people they have more intensely,” said David Crowe, chief economist for the National Association of Home Builders.

Modest hiring speaks to still relatively weak confidence among home builders in some parts of the country, he said. Builders prefer to pay existing workers overtime rather than inflating payrolls only to see demand dry up due to rising interest rates or other economic factors.

Still, construction spending rose 0.6% in August from a month earlier, mainly reflecting a solid pickup in home construction. Private residential construction rose by 1.2% in August and nonresidential spending improved just 0.1%.

The home building gain came despite an increase in mortgage rates that began in the spring. Home sales have remained strong, in part because some buyers appear to be trying to lock in rates before they rise further. And with inventory still tight, home building is picking up ever slightly.

The September increase in construction jobs, however, does speak to potential improvement for building outside homes. September was the first month since February when more jobs were created in nonresidential construction than in residential.

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